Investment Link Assurance Charges

Further to the topic on the Investment Link Insurance, let's take a closer look on the assurance charges

Wifey paid $100/month for the sum assured $82k with coverage of Death, Total & Permanent Disability, Terminal Illness and Crisis Cover Provider III ("Protection"). Of course, this $100 will go into purchase of unit trust while assurance and administration charges will be deducted by the insurance company by way of selling your unit in your policy based on market price. Different kind of charges will be imposed on the policy holder indrectly.

Based on the insurance policy booklet provided, for a Female, non-smoker, sum assured $82k, at the age of 56, the montly assurance charges would have exceed $100, which means that from age of 56 onward, your $100 are not sufficient to contra off your assurance charges, you are on the mercy of good unit trust performance and hope the balance units are sufficient to fill up the shortfall.

If another round of financial crisis hits during that period, price of your unit trust fall sharply, and unit deductions are much faster than the initial planned. When tthe time your existing units are fully deducted and your monthly $100 contributions is sufficient for the assurance charges, policy termination, premium increment, sum assurance reduction is the left few solutions for you.

Do you really want to fall into this dilemma?